“We are pleased to report solid first quarter results that reflect
improving company fundamentals,” said Lynn Dugle, Chief Executive
Officer of Engility. “In particular, we generated strong margins and a
book-to-bill ratio of greater than one for the quarter. And, continuing
the initiative to upgrade our leadership, we successfully recruited a
proven executive, Scott Whatmough, to lead our Defense Group. Looking
forward, we are aggressively pursuing organic growth by targeting larger
opportunities that are aligned with our differentiated capabilities.”

First Quarter 2017 Results

Total revenue for the first quarter of 2017 was $485 million. GAAP
operating income was $34 million and GAAP operating margin was 7.0%.
GAAP net income attributable to Engility was $7 million, or $0.18 per
diluted share. Cash flow used in operating activities was $12 million.

Adjusted operating income was $41 million and adjusted operating margin
was 8.4%. Adjusted net income attributable to Engility was $21 million,
or $0.55 per diluted share. Adjusted EBITDA was $45 million and adjusted
EBITDA margin was 9.4%.

Information about the Company's use of non-GAAP financial information is
provided below under “Non-GAAP Measures.”

Key Performance Indicators for the First Quarter of 2017

Book-to-bill ratio for the first quarter of 2017 was 1.2x. Net
bookings for the first quarter of 2017 were $567 million, a 43%
increase over the first quarter of 2016.

Total backlog at the end of the first quarter of 2017 was $3.5
billion, an increase of 20% from the first quarter of 2016.

Days sales outstanding (DSO) at the end of the first quarter of 2017,
net of advanced payments, was 60 days, compared to 59 days at the end
of the first quarter of 2016.

Cash flow used in operating activities was $12 million for the first
quarter of 2017.

During the first quarter of 2017, the Company made total debt payments
of $32 million.

Significant First Quarter 2017 Developments

In March 2017, Scott Whatmough was appointed senior vice president of
the Company’s Defense Group. Whatmough joined Engility after a
successful 30 year tenure at Raytheon, where he most recently led a
$900 million military electronics systems business. Whatmough will
continue to drive Engility’s Defense Group’s strategic shift to
higher-end markets such as cybersecurity, enterprise modernization and
other areas where the Company can differentiate its solutions.

In February 2017, the Company closed on the repricing of its aggregate
$803 million B1 and B2 term loans. As a result of this transaction,
the Company expects to lower its fiscal year 2017 interest expense by
approximately $5 million after fees and expenses.

In January 2017, the Company completed the sale of its previously
wholly-owned subsidiary International Resources Group Ltd. (IRG). The
sale was the result of the Company’s strategic review of its business
and determination that the USAID portion of the Company’s
international operations no longer closely aligned with its future
strategic direction.

Fiscal Year 2017 Guidance

The Company is reiterating the fiscal year 2017 guidance it issued on
March 9, 2017, based on Engility’s financial results for the first
quarter of 2017 and its outlook for the remainder of 2017. The table
below summarizes the Company’s fiscal year 2017 guidance. This guidance
reflects the February 2017 repricing of the Company’s aggregate $803
million B1 and B2 term loans, and the IRG divestiture in January 2017.
In fiscal year 2016, IRG generated $58 million in revenue and $1 million
in EBITDA and operating income. IRG’s revenue and profitability results
are included in the Company’s fiscal year 2016 historical financial
results, but are immaterial to Engility’s 2017 financial results as this
business was sold on January 6, 2017.

Fiscal Year 2017 Guidance

Revenue

$1.95 billion - $2.05 billion

GAAP Diluted EPS (1)

$0.75 - $0.85

EBITDA (2)

$173 million - $183 million

Operating Cash Flow

$95 million - $105 million

(1)

2017 GAAP diluted EPS guidance includes approximately $3 million of
restructuring and integration costs and $25 million of amortization
expense related to intangible assets acquired by the Company. It
also assumes weighted-average outstanding shares of approximately 38
million and a full-year effective tax rate of 37 percent.

(2)

2017 EBITDA guidance includes approximately $3 million of
restructuring and integration costs.

Non-GAAP Measures

The tables under "Engility Holdings, Inc. Reconciliation of Non-GAAP
Measures" present Adjusted Operating Income, Adjusted Operating Margin,
Earnings before Interest, Taxes, Depreciation, and Amortization
(“EBITDA”), Adjusted EBITDA, EBITDA Margin, Adjusted EBITDA Margin,
Adjusted Net Income, and Adjusted Diluted EPS, reconciled to their most
directly comparable GAAP measure. These financial measures are
calculated and presented on the basis of methodologies other than in
accordance with U.S. generally accepted accounting principles ("Non-GAAP
Measures"). Engility has provided these Non-GAAP Measures to adjust for,
among other things, the impact of amortization expenses related to our
acquisitions of TASC, Inc. (“TASC”) and Dynamics Research Corporation,
costs associated with a loss or gain on the disposal or sale of
property, plant and equipment, acquisition and restructuring-related
expenses, legal and settlement costs, refinancing-related expenses, and
the impact of certain tax related items. These items have been adjusted
because they are not considered core to the Company’s business or
otherwise not considered operational or because these charges are
non-cash or non-recurring. The Company presents these Non-GAAP Measures
because management believes that they are meaningful to understanding
Engility’s performance during the periods presented and the Company’s
ongoing business. Non-GAAP Measures are not prepared in accordance with
GAAP and therefore are not necessarily comparable to similarly titled
metrics or the financial results of other companies. These Non-GAAP
Measures should be considered a supplement to, not a substitute for, or
superior to, the corresponding financial measures calculated in
accordance with GAAP.

With respect to our “Fiscal Year 2017 Guidance” above, reconciliation of
EBITDA guidance to the closest corresponding GAAP measure on a
forward-looking basis is not available without unreasonable efforts. We
are unable to reconcile EBITDA to net income due to our inability to
predict certain non-cash items included in net income, including taxes
and timing of restructuring charges. The disclosure of such
reconciliations may imply to our investors a degree of precision in our
calculations that is not possible. For the same reasons, the Company is
unable to address the probable significance of the unavailable
information.

Conference Call Information

Engility will host a conference call at 5:00 p.m. Eastern Time on May 4,
2017 (today), to discuss the financial results for its first quarter
2017 and its fiscal year 2017 guidance.

Listeners may access a webcast of the live conference call from the
Investor Relations section of the company's website at http://www.EngilityCorp.com.
Listeners also may access a slide presentation on the website, which
summarizes the Company’s 2017 first quarter results and its fiscal year
2017 guidance. Listeners should go to the website at least 15 minutes
before the live event to download and install any necessary audio
software.

Listeners also may participate in the conference call by dialing (888)
655-5029 (domestic) or (503) 343-6026 (international) and entering pass
code 1227238.

A replay will be available on the company's website approximately two
hours after the conference call and continuing for one year. A
telephonic replay also will be available through May 11, 2017 at (855)
859-2056 (domestic) or (404) 537-3406 (international) and entering pass
code 1227238.

About Engility

Engility (NYSE: EGL) is engineered to make a difference. Built on six
decades of heritage, Engility is a leading provider of integrated
solutions and services, supporting U.S. government customers in the
defense, federal civilian, intelligence and space communities. Our
innovative, highly technical solutions and engineering capabilities
address diverse client missions. We draw upon our team’s intimate
understanding of customer needs, deep domain expertise and technical
skills to help solve our nation’s toughest challenges. Headquartered in
Chantilly, Virginia, and with offices around the world, Engility’s array
of specialized technical service offerings include high-performance
computing, cybersecurity, enterprise modernization and systems
engineering. To learn more about Engility, please visit www.engilitycorp.com
and connect with us on Facebook, LinkedIn and Twitter.

Forward-Looking Statements

This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including statements regarding Engility’s future prospects, projected
financial results, estimated integration costs and acquisition related
amortization expenses, business plans, as well as the TASC transaction
and its expected benefits and the timing of such benefits. Words such as
"may," "will," "should," "likely," "anticipates," "expects," "intends,"
"plans," "projects," "believes," "estimates" and similar expressions are
also used to identify these forward-looking statements. These statements
are based on the current beliefs and expectations of Engility’s
management and are subject to significant risks and
uncertainties. Actual results may differ from those set forth in the
forward-looking statements. Factors that could cause Engility’s actual
results to differ materially from those described in the forward-looking
statements can be found under the heading "Risk Factors" included in our
Annual Report on Form 10-K for the year ended December 31, 2016, and
more recent documents that have been filed with the Securities and
Exchange Commission (SEC) and are available on the investor relations
section of Engility’s website (http://www.engilitycorp.com)
and on the SEC’s website (www.sec.gov).
Forward-looking statements are made only as of the date hereof, and we
undertake no obligation to update or revise the forward-looking
statements, whether as a result of new information, future events or
otherwise, except as required by law. In addition, historical
information should not be considered as an indicator of future
performance.

ENGILITY HOLDINGS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

Three Months Ended

March 31, 2017

April 1, 2016

Revenue

$

485,215

$

522,779

Costs and expenses

Cost of revenue

415,023

449,330

Selling, general and administrative expenses

36,443

46,976

Total costs and expenses

451,466

496,306

Operating income

33,749

26,473

Interest expense, net

20,921

29,439

Other expenses, net

(70

)

(61

)

Income (loss) before income taxes

12,758

(3,027

)

Provision (benefit) for income taxes

5,010

(902

)

Net income (loss)

7,748

(2,125

)

Less: Net income attributable to non-controlling interest

815

1,105

Net income (loss) attributable to Engility

$

6,933

$

(3,230

)

Earnings (loss) per share attributable to Engility

Basic

$

0.19

$

(0.09

)

Diluted

$

0.18

$

(0.09

)

Weighted average number of shares outstanding

Basic

36,781

36,715

Diluted

37,766

36,715

ENGILITY HOLDINGS, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands)

March 31, 2017

December 31, 2016

Assets:

Current assets:

Cash and cash equivalents

$

24,875

$

48,236

Receivables, net

355,370

334,248

Prepaid income taxes

4,021

5,430

Assets held for sale, current

—

20,242

Other current assets

25,794

24,974

Total current assets

410,060

433,130

Property, plant and equipment, net

45,623

46,547

Goodwill

1,078,454

1,078,454

Identifiable intangible assets, net

385,770

393,891

Deferred tax assets

226,982

232,283

Assets held for sale

—

11,962

Other assets

5,138

2,292

Total assets

$

2,152,027

$

2,198,559

Liabilities and Equity:

Current liabilities:

Current portion of long-term debt

$

26,947

$

26,947

Accounts payable, trade

51,715

43,943

Accrued employment costs

90,739

98,860

Accrued expenses

74,065

76,870

Advance payments and billings in excess of costs incurred

34,075

33,259

Deferred income taxes, current and income tax liabilities

85

209

Liabilities held for sale, current

—

4,341

Other current liabilities

24,066

36,410

Total current liabilities

301,692

320,839

Long-term debt

1,009,789

1,039,993

Income tax liabilities

63,101

64,852

Liabilities held for sale

—

1,084

Other liabilities

64,201

66,986

Total liabilities

1,438,783

1,493,754

Equity:

Preferred stock, par value $0.01 per share, 25,000 shares
authorized, none issued or outstanding as of March 31, 2017 or
December 31, 2016

—

—

Common stock, par value $0.01 per share, 175,000 shares
authorized, 36,808 and 36,776 shares issued and outstanding as of
March 31, 2017 and December 31, 2016, respectively

368

368

Additional paid-in capital

1,240,069

1,237,826

Accumulated deficit

(533,895

)

(541,702

)

Accumulated other comprehensive loss

(4,705

)

(4,865

)

Non-controlling interest

11,407

13,178

Total equity

713,244

704,805

Total liabilities and equity

$

2,152,027

$

2,198,559

ENGILITY HOLDINGS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Three Months Ended

March 31, 2017

April 1, 2016

Operating activities:

Net income (loss)

$

7,748

$

(2,125

)

Share-based compensation

1,637

2,756

Depreciation and amortization

10,861

13,815

Gain on sale of property, plant and equipment

(570

)

—

Bad debt expense

174

—

Amortization of bank debt fees

2,133

2,242

Deferred income taxes

6,319

183

Excess tax deduction on share-based compensation

(416

)

—

Changes in operating assets and liabilities:

Receivables

(21,296

)

3,578

Other assets

130

(91

)

Accounts payable, trade

7,811

7,003

Accrued employment costs

(8,122

)

13,997

Accrued expenses

(3,144

)

5,619

Advance payments and billings in excess of costs incurred

816

(13,775

)

Other liabilities

(16,474

)

(3,471

)

Net cash (used in) provided by operating activities

(12,393

)

29,731

Investing activities:

Proceeds from sale of business, net of amount placed in escrow

23,005

—

Proceeds from sale of property, plant and equipment

2,902

—

Capital expenditures

(1,505

)

(3,879

)

Net cash provided by (used in) investing activities

24,402

(3,879

)

Financing activities:

Repayment of long-term debt

(32,336

)

(11,298

)

Gross borrowings from revolving credit facility

129,000

15,000

Repayments of revolving credit facility

(129,000

)

(15,000

)

Payment of employee withholding taxes on share-based compensation

(41

)

(1,770

)

Dividends paid

(407

)

(1,661

)

Distributions to non-controlling interest member

(2,586

)

(1,747

)

Net cash used in financing activities

(35,370

)

(16,476

)

Net change in cash and cash equivalents

(23,361

)

9,376

Cash and cash equivalents, beginning of period

48,236

30,022

Cash and cash equivalents, end of period

$

24,875

$

39,398

ENGILITY HOLDINGS, INC.

RECONCILIATION OF NON-GAAP MEASURES

The following tables set forth a reconciliation of each of these
Non-GAAP Measures to the most directly comparable GAAP measure for
the periods presented.